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President Bingu wa Mutharika’s decision to shift the presidency to Lilongwe four months ago has led to loss of business by hotels in the commercial capital Blantyre, it has been established.
Two of the city’s three top hotels, Le Meridien Mount Soche Hotel and Hotel Victoria, confirmed Thursday the shift has resulted in a corresponding shift of business to the capital city as well.
In his inauguration speech on May 24 this year, Mutharika ordered that he would shift the presidency from Blantyre to Lilongwe as part of his administration’s expenditure control measures because Lilongwe is the official seat of government.
Capital Hill, the international community and the National Assembly are all in Lilongwe hence it did not make economic sense for the President and cabinet ministers to operate from Blantyre, Mutharika said.
For 40 years since independence, Mutharika’s two predecessors the late Hastings Kamuzu Banda (1964 to 1994) and Bakili Muluzi (1994 to 2004) stayed at Sanjika Palace in Blantyre.
Stan Phiri, director of sales and marketing for Le Meridien Malawi, said in an interview yesterday Mount Soche Hotel has lost the business it used to get when the President was resident in Blantyre.
“We have been affected in a sense that certain functions used to be held in Blantyre by virtue of the President living here. For example, when new diplomats presented Letters of Credence they used to spend a night or two,” he said, adding that some visitors for the head of state also used to sleep in hotels.
But Phiri said in terms of conferences, the hotel has not lost much because Mount Soche Hotel is still getting businesses in that area and that is why it has just invested in a high-tech public address system and an LCD projector for the Njamba Conference Centre.
Besides Mount Soche, Phiri said Ku Chawe Inn on the rim of Zomba Plateau has also been hit as some of the envoys and guests that visited the President preferred to spend nights there.
Phiri said currently the hotel is working on ways and means to make up for lost business opportunities.
Hotel Victoria chairman Farouk Gani agreed with Phiri that the hotel industry in Blantyre has been affected by the shifting of the presidency to Lilongwe both in terms of accommodation and conferences.
But Gani said correspondingly, hotels in Lilongwe have benefited from the presidency and some government departments’ move.
To compensate for the lost business, Gani said, Hotel Victoria is working towards getting business from the private sector.
Protea Ryalls Hotel could not be drawn into commenting on how it has been affected as both general manager Ronwell Malikita and marketing manager Prudence Chanthunya were reported out to South Africa.
Where is growth strategy?
Our Reporter
The Economics Association of Malawi (Ecama) last week demanded an update on the growth strategy, a government plan expected to help Malawi attain the targeted six percent annual GDP growth.
“While this growth strategy has been applauded by many as a very good plan for the country that could spur economic growth, its implementation remains uncertain and unclear [just] like many other past documents that this country has prepared.”
“No deliberate efforts by its stake-holders, it would seem, have been made to implement the agreed action plans and monitor progress,” said Simon Itaye, Packaging Industries chief executive in a paper presented at an Ecama public talk on economic growth prospects in Malawi.
The growth strategy, developed by private and public sector with donor’s participation, identified key growth areas of agriculture, manufacturing, tourism and mining as means through which the growth target can be met.
When he was Economic and Development Planning Minister, President Bingu wa Mutharika told The Nation in October last year that government was waiting for aid from donors to launch the plan.
But a month after the budget was tabled and passed in Parliament, nothing on the ground seems to move towards the plan’s execution.
Observers say Malawi’s economy has since the 1990s failed to hit the six percent growth bench mark due to high level corruption, macroeconomic instability, mismanagement, poor infrastructure, an unfriendly business regime and external shocks.
Itaye, who was guest speaker at the meeting, said although attempts have been made to address the problems, the efforts have been disjointed and have, therefore, failed to have their desired effect.
He noted that liberalisation of the economy—removing trade protection, introducing financial deregulation and bringing a more disciplined approach towards fiscal and monetary management—are some of the remedies that government is using to achieve economic prosperity.
But despite these efforts, said Itaye, Malawi’s industrial performance still remains weak and its competitive position is one of the weakest in the Sadc region.
Itaye said with the opening up of the 1980s, mainly through a World Bank structural adjustment programme, land locked Malawi manufacturers now face competition largely from South Africa and to some extent Zimbabwe.
Both countries, he observed, have better shipping routes, superior international transportation networks and good general infrastructure.
He added that the two countries, especially South Africa, have a longer tradition of industrialisation and larger domestic markets that provide their manufacturers with more easily captured potential for attaining both economies of scale and scope in production.
“As some Malawian companies cannot favourably compete in such a liberalised environment, the result has been the closure of some businesses and inability by a larger proportion of manufacturers to shift production abroad or export goods and services to foreign countries,” said Itaye.
He added that low investment in education to produce quality school leavers and university graduates who can be turned into well trained artisans and qualified technical staff has affected the country’s out put.
On macroeconomic mismanagement, Itaye said this has led to high interest rates partly due to expectations on future inflation and government’s tendency to crowd the private sector out of the capital markets.
Itaye then suggests a way forward. “With a strong political will, concerted efforts by both private and public sectors and a willingness to adapt, this country could be transformed.”
“It is, however, clear that there are no quick fixes to prosperity. Economic growth is a long process that cannot simply be tackled by periodic plans but requires a vibrant private sector and a committed well trained public sector,” said Itaye.
During the same meeting, National Bank deputy chief executive George Partridge said government’s economic policies can only achieve crucial growth targets if the country puts in place a solid foundation of good governance.
INDEbank on Super Sport 3
Our Reporter
Indebank Limited has become the first Malawian commercial bank to advertise on digital satellite television, the bank said this week.
Depicting Malawi’s major tourist attraction areas of Mulanje Mountain, Lake Malawi and national parks, the bank links its services to the country’s traditional motto of being the warm heart of Africa.
To be beamed on sports TV channel, Super Sport three, the advert will be coming out at least twice a week during major football games particularly those involving Arsenal and Manchester United.
“We have been vigilant in terms of promoting our brand using local advertising. But we now want to catch all segments, including those who spend most of their time watching international channels,” said Indebank acting chief executive Makwemba Malonje.
He added: “Our vision is to make INDEbank a regional brand. Since there is a big football audience both in Malawi and abroad, we feel Super Sport three can help us reach our audience and realise our vision.”
The commercial features former miss Malawi Elizabeth Pullu welcoming a romantic tourist couple into INDEbank banking hall at top Mandala in Blantyre.
“Malawi is the warm heart of Africa and we are saying that at Indebank, our hearts are even warmer,” said the bank’s public relations officer Lillian Moyo.
Moyo added that exposing and promoting Malawi’s tourism sites through the advert is part of INDEbank’s corporate responsibility to the nation.
Super Sport three started running the commercial during the first week of September.
Local debt to hit K80 bn by June
Ephraim Munthali
The National Bank of Malawi (NBM) said last week it expects the domestic debt [minus interest obligations) to hit K80 billion by June end from the present K60 billion.
This projection is likely to throw off balance the 2004/2005 budget’s main objective of reducing interest rates and portrays a fiscal year haunted by rising inflation and a depreciating kwacha.
“[This increase in domestic debt] will exert a lot of pressure on interest rates and worsen the crowding out effects on the private sector,” said the bank in its economic newsletter released on Friday.
NBM said while the new government has vowed to implement expenditure controls that are vital to narrow the fiscal gap, the budget has failed to match the words with action as spending rose 15.6 percent from K77 billion last year to K89 billion this year.
Initially, Finance Minister Goodall Gondwe pegged the budget at K85 billion before adding K4 billion but did not say the source of the extra money.
NBM argued that while the bloated budget could be in line with inflation and growth targets under normal circumstances, it comes after the new government’s own admission that billions of kwachas were wasted through carelessness and fraud in the past budget.
Director of Public Prosecutions Ishmael Wadi said recently that the Bakili Muluzi cabinet embezzled K10 billion in the last fiscal year through fraud and corruption while his predecessor Fahad Assani said a third of the budget is lost through similar ways annually.
In his budget statement, Gondwe said spending rose last year due to interest payments which went up from the estimated K8 billion to K18 billion.
With inflation estimated at 18-20 percent during the current fiscal year coupled with the present negative interest rates on deposits, it would be surprising to see interest rates going down further, said NBM. Inflation now stands at 11.3 percent.
The bank said talk of interest rates plummeting further get even less certain if fuel prices and possible exchange movements are factored in.
“There is always the possibility, however, that politics could supersede economics. Our advice is at best to assume that the current bank rate would prevail,” said the bank.
Reserve Bank of Malawi governor Elias Ngalande last reduced the bank rate in June this year by 10 percentage points from 35 percent after a similar cut towards the end of 2003 from 45 percent.
Economic commentators were not impressed on both occasions, arguing that Ngalande’s decisions were cosmetic because they were not supported by favourable macroeconomic indicators.
The budget deficit and inflation, argued the analysts, were still too high to support the decisions.
The central bank is expected to maintain a tight monetary policy stance by leaving the Liquidity Reserve Requirement stuck at 27.5 percent and by intensifying open market operations through Net Domestic Assets (NDA) to mop up excess cash.
“Ironically, part of the massive cash injections are self inflicted through direct purchasing of foreign exchange [by RBM] at the tobacco auction floors.
“Mopping up operations will still be a difficult exercise judged by the additional spill over effects of a bigger than expected budget,” said NBM.
Government wants to bring down inflation to around 10 percent by December next year and further drop it to a 5-8 percent range in the medium term.
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